us interest rates

IMF analysis suggests that the Fed is too optimistic on the likely impact of initial Trump tariffs.

US public debt is likely to reach a record share of GDP as tariff revenue and economic growth are unlikely to pay for Trump policies.

Barring last-minute changes, the US is imposing punitive tariffs on its close ally Canada, Mexico, and China, with a EU tariff to come.

The Fed expects inflation will take longer to return to target, with upside risks reflecting recent firmer inflation and Trump policies.

The Fed hopes it can achieve a soft landing, lowering the policy rate to around 3%, broadly matching its estimate of the neutral rate.

The US unemployment rate has edged above most estimates of the NAIRU for the first time since 2021, supporting a Fed rate cut next month.

Rising unemployment has almost reached the "Sahm rule" threshold that has historically been a useful guide to US recessions.

Any delay in achieving the 2% inflation target points to interest rates staying high for longer

Wages growth has slowed a lot from its COVID peak, but the improvement looks to have broadly stalled recently.

Underlying inflation has picked up sharply in Q1 on a range of measures.